Why Expats Need Savings
What is the number one item to tick off a list when considering becoming an expat? Savings. Yes, you need to be in reasonable health and of course you need to have a good attitude towards adventure and an open mind about new people and places but none of that matters if you can’t fund your move or protect yourself from unexpected financial drain.
Why Savings?
The costs will start adding up even before you begin to pack: work permits or visas, insurance, moving companies, and possibly one or more trips to the host country to start shopping for new homes.
Once you arrive you will need a deposit before you can rent or purchase a home, money for a car, a way to cover unexpected taxes and insurance—you may have been thorough in your research but you will always be surprised by a bill or fee that you didn’t plan on. Until you have your routines you may not know of the less expensive grocery or home goods stores.
Many expats move overseas with their company and receive an excellent package covering relocation costs, an annual trip home for the whole family, healthcare, possibly a car and possibly rent or mortgage. These expats will still encounter expenses that will quickly drain an account, including the surprise expenses no one ever plans on or expects—these can include emergency flights home, a car repair not included in the contract, school uniforms, furniture, taxis and restaurants.
Another reason to have the savings is in case the move overseas doesn’t work out. You will need this money when you return and need to restart your life back home.
You may be planning on retiring overseas or living off an income from home, such as investments or property or you may be planning on getting a job—or you may have a job waiting for you, but however you plan on supporting yourself something could go wrong with those plans and again, the savings will protect you until you can set things right again.
Ideas to start saving
Apart from an ability to tell the future accurately, the only way to prepare for all the costs—planned or unplanned, of moving abroad is to have an excellent savings plan.
If you can plan far enough in advance, open a savings account and put aside a certain amount each month. Do not touch that savings account! You will find it starting to really add up after a few years, and after 10 years there will be a nice amount of savings.
If you can downsize a few years in advance do so, then put the money you’ve got left over into a savings account.
Meet with lawyers, financial advisors and accountants that can advise you on laws and products that you can maintain at home and/or in your host country. An ongoing savings account even after you have moved will give you the reassurance that you can cope with most issues.
A final word of warning
It is dangerous to imagine that debts will go away if you move overseas. Poor credit ratings and debts can follow you even after you have moved to another country. Get your finances in order before you move and ideally have a good savings in place as well and you will be able to more comfortably enjoy your life as an expat.